Theories of justice rely on a variety of criteria to determine what social arrangements should be considered just. For most theories, the distribution of financial resources matters. However, they take the existence of money as a given and tend to ignore the way in which the creation of money impacts distributive justice. Those with access to collateral are favoured in the creation of credit or debt, which represents the main form of money today. Appealing to the idea that access to (...) credit confers freedom, and that inequalities in this freedom are morally arbitrary, this article shows how the advantage to those with collateral plays out in different ways in today’s economy. The article identifies several forms of bias inherent in money creation, and its subsequent destruction: loans from commercial banks to individuals and corporations, interbank lending, lending from central banks to commercial banks, and selective bail-outs by central banks. These are not mere inequalities: they are unjust since alternative designs of the financial architecture exist that would significantly reduce them. The paper focuses on one possible reform with the potential to address several of the types of bias identified, namely the separation of money creation from private bank credit. (shrink)

Redish et al. rely too much on a rational and innate view of decision-making, when their emphasis on variation, their integrative spirit, and their neuroscientific insights point towards a broader view of why addiction is such a tenacious problem. The integration of subjective, sociocultural, and evolutionary factors with cognitive neuroscience advances our understanding of addiction and decision-making.

Müller & Schumann (M&S) deserve applause for their interdisciplinary examination of drug use, evolution, and learning. Further steps can deepen their evolutionary analysis: a focus on adaptive benefits, a distinction between approach and consummatory behaviors, an examination of how drugs can create adaptive lag through changing human niche construction, the importance of other neurobehavioral mechanisms in drug use besides instrumentalization, and the importance of sociocultural dynamics and neural plasticity in both human evolution and drug use.

ABCP asset‐backed commercial paper ABS asset‐backed security ABX a source of price indices for MBSs and CDSs ARM adjustable‐rate mortgage B...

There are major concerns about the level of personal borrowing, particularly sourced from credit cards. This paper charts the progress of an initiative to create a Responsible Lending Index (RLI) for the credit industry. The RLI proposed to voluntarily benchmark lending standards and promote best practice within the credit industry by involving suppliers of credit, customer representatives and regulators. However, despite initial support from some banks, consumer bodies and the Chair of the Treasury Select Committee, it failed to (...) gain sufficient support from financial institutions in its original format. The primary reasons for this were related to the complexity of building such a robust index and the banks trade body’s fear of exposing its members to public scrutiny. A revised alternative, the Responsible Lending Initiative, was proposed which took into account these concerns. However, the Association of Payment Clearing Service (APACS), the trade body of the credit industry, then effectively destroyed the proposal. This article describes an attempt to address the challenges in the credit card industry with the initiation of the RLI, reflected in stakeholder discourse and in the context of a wider concern expressed by the involved stakeholders in terms of the need for greater responsibility in the banking industry’s lending practices. (shrink)

To address the rising concern that algorithmic decision-making may reinforce discriminatory biases, researchers have proposed many notions of fairness and corresponding mathematical formalizations. Each of these notions is often presented as a one-size-fits-all, absolute condition; however, in reality, the practical and ethical trade-offs are unavoidable and more complex. We introduce a new approach that considers fairness—not as a binary, absolute mathematical condition—but rather, as a relational notion in comparison to alternative decision-making processes. Using U.S. mortgage lending as an example (...) use case, we discuss the ethical foundations of each definition of fairness and demonstrate that our proposed methodology more closely captures the ethical trade-offs of the decision-maker. (shrink)

Securities lending has been a lucrative business for mutual funds and exchange-traded funds over the past decade. Unfortunately for investors, the sponsors of these funds have not been very transparent with the details of their securities lending programs, and consequently most investors in these funds are unaware of their exposure to the risks inherent in securities lending. Interestingly, most funds do not return the full profits from securities lending activities to their investors. In this paper, we (...) examine and discuss the ethical considerations related to the securities lending activities of mutual funds and ETFs and offer a series of best practices that we believe will provide better transparency of these activities to fund investors. (shrink)

Case study for Business Ethics, 5000 words. Considers the state of the payday lending market in USA and Canada as of March 2018. Suitable for undergraduate or business school use. Includes the discussion of: Storefront and online payday lending in state/province and national contexts. Applicability of the concept of exploitation to payday lending. Alternatives to payday lending ("Payday Alternative Loans" provided through credit unions, and savings incentive programs that reduce demand for payday lending). U.S. government (...) regulation of 2017 that was rescinded shortly before it was to have effects on business, specifically due to change of Presidential administration (January 2018). Class discussion questions. References. (shrink)

This paper explores the ways in which a fuller attention to suffering in the tradition of the early Frankfurt School might valuably inform international political thought. Recent poststructural writing argues that trauma is silenced to prevent it disrupting narratives of order and progress and instead advocates a continual ‘encircling’ of trauma that refuses incorporation into a broader historical narrative. This paper welcomes this challenge to mainstream international ethics: attention to particular suffering provides an important challenge to the abstraction, instrumentalism and (...) universalism of modernity. However, if we simply mark trauma and refuse to incorporate it into any kind of narrative, we cannot profit from the ways in which suffering can illuminate the structures and ways of thinking that create it. Drawing on Adorno's negative dialectics, the paper argues that a dialectical understanding of the relationship between universalising order and disrupting particularity can lead from individual suffering towards a political re-engagement with the universal. (shrink)

Created as a social being, human beings communicate and interact with other people in society. Their economic activities are also part of this communication.Transactions such as shopping and lending are also an element of the economy. Troughout history, legal systems have laid down rules regulating these activities,and imposed orders and prohibitions. Studies comparing Islamic and Jewish legal systems, which originated from revelation and still applied by their followers, are less than those made in terms of the history of religions. (...) The aim of this study is to contribute to the comperative studies in the field of law by examining the similar and differente aspects of both legal systems in terms of contractual contract. It has been determined that there are more similarities in the provisions of Islamic law and Jewish law regarding the issue of lending. The fact that the sources of these two legal systems are the same is the most natural reason for similarity.The differences are due to the interpretations of the Jews that changed religious rules in order to ensure harmony between the law and the life conditions that changed over time. (shrink)

This article grapples with the causes of India’s microfinance crisis. By contrasting Bangladesh’s highly successful Grameen model with the allegedly “universalizable” version of India’s SKS Microfinance, trust or social capital is isolated—not just narrowly interpreted within standard economic theory, but more broadly construed—as the essential element accounting for the early success of microfinance. It is argued that the microfinance experience has been widely misinterpreted, in both analytical and policy terms. This article suggests inherent limits in extending the model to for-profit (...) institutions and, in particular, to the pace of scaling up. (shrink)

Crowdfunding platforms have revolutionized entrepreneurial finance, with 200 billion dollars expected to be dispersed annually to entrepreneurs and small business owners by 2020. Despite the importance of this growing phenomenon, our knowledge of the dynamics of successful lending-based prosocial crowdfunding and its implications for the business ethics literature remain limited. We use a social responsibility lens to examine whether crowdfunders on a lending-based prosocial platform lend their money based on altruistic or strategic motives. Our results indicate that the (...) dynamics of prosocial lending-based crowdfunding are somewhat consistent with traditional forms of financing. Specifically, despite a prosocial setting in nature, crowdfunders tend to act strategically, positively responding to signals of quality and low risk. Notably, we also find that projects that are high on both financial and social appeal receive the highest average amount of funding. Furthermore, language on the lender’s profile indicating ability to pay is positively related to both funding success and funding amount. Our study contributes to filling the gap in the business ethics literature about the dynamics of lending-based prosocial crowdfunding, and the strategic and altruistic ethical motives that drive lenders in such endeavors. (shrink)

Crowdfunding platforms have revolutionized entrepreneurial finance, with 200 billion dollars expected to be dispersed annually to entrepreneurs and small business owners by 2020. Despite the importance of this growing phenomenon, our knowledge of the dynamics of successful lending-based prosocial crowdfunding and its implications for the business ethics literature remain limited. We use a social responsibility lens to examine whether crowdfunders on a lending-based prosocial platform lend their money based on altruistic or strategic motives. Our results indicate that the (...) dynamics of prosocial lending-based crowdfunding are somewhat consistent with traditional forms of financing. Specifically, despite a prosocial setting in nature, crowdfunders tend to act strategically, positively responding to signals of quality and low risk. Notably, we also find that projects that are high on both financial and social appeal receive the highest average amount of funding. Furthermore, language on the lender’s profile indicating ability to pay is positively related to both funding success and funding amount. Our study contributes to filling the gap in the business ethics literature about the dynamics of lending-based prosocial crowdfunding, and the strategic and altruistic ethical motives that drive lenders in such endeavors. (shrink)

Many philosophers take the point of Plato's Euthyphro to be an indictment of attempts to ground morality in religion, specifically in the attitudes of a deity or deities. It has been argued cogently in recent essays that Plato's case is far from conclusive. This essay suggests instead that the Euthyphro can be read more narrowly as raising critical questions about a specific religious virtue, Piety. Then it presents the ingredients of a reply to those questions. The reply proceeds by suggesting (...) that one need not accept the standards of definition used by Plato, and that one can provide an explanation of what Piety is by embedding Piety in a more comprehensive picture of the human, the divine, and the relations between the two. The picture makes use of a doctrine of divine sovereignty and a doctrine concerning love between God and humans. (shrink)

Crowdfunding platforms have revolutionized entrepreneurial finance, with 200 billion dollars expected to be dispersed annually to entrepreneurs and small business owners by 2020. Despite the importance of this growing phenomenon, our knowledge of the dynamics of successful lending-based prosocial crowdfunding and its implications for the business ethics literature remain limited. We use a social responsibility lens to examine whether crowdfunders on a lending-based prosocial platform lend their money based on altruistic or strategic motives. Our results indicate that the (...) dynamics of prosocial lending-based crowdfunding are somewhat consistent with traditional forms of financing. Specifically, despite a prosocial setting in nature, crowdfunders tend to act strategically, positively responding to signals of quality and low risk. Notably, we also find that projects that are high on both financial and social appeal receive the highest average amount of funding. Furthermore, language on the lender’s profile indicating ability to pay is positively related to both funding success and funding amount. Our study contributes to filling the gap in the business ethics literature about the dynamics of lending-based prosocial crowdfunding, and the strategic and altruistic ethical motives that drive lenders in such endeavors. (shrink)

Family financing has become a powerful channel for entrepreneurs to obtain entrepreneurial funding. How do family members use intent and quality signals to select new ventures to provide lending support? Building on the signaling theory, this study provides the first quantitative evidence using a sample of 166 samples of family lenders in China. Our findings reveal that psychological capital can support entrepreneurs to obtain family lending. As an intent signal, psychological capital becomes more influential when quality signals, corporate (...) competitive advantage, and firm performance perform more positively. This study emphasizes that family financing support is not only out of love or altruism and extends the literature concerning the influence of positive psychological capital in financial investment decisions. (shrink)

In this paper, the stylized features of incomplete and asymmetric information in the interbank market leading to banks’ precautionary behaviors are introduced. Based on banks’ stylized behavioral rules, the influencing mechanism of information diffusion on interbank risk contagion is analyzed, and how the existence of information diffusion and banks’ information-obtaining ability influence the interbank risk contagion is verified through computational simulations. The results show that information diffusion can significantly accelerate the process of and magnify the extent and (...) probability of interbank risk contagion, and improving banks’ information-obtaining ability could lower the speed and extent of the interbank risk contagion. This paper also finds and explains some special phenomena of rollover risk contagion when information diffusion exists: the saltatory risk contagion, the circular liquidity trap, and the risk discovery of information diffusion. (shrink)

To address the rising concern that algorithmic decision-making may reinforce discriminatory biases, researchers have proposed many notions of fairness and corresponding mathematical formalizations. Each of these notions is often presented as a one-size-fits-all, absolute condition; however, in reality, the practical and ethical trade-offs are unavoidable and more complex. We introduce a new approach that considers fairness—not as a binary, absolute mathematical condition—but rather, as a relational notion in comparison to alternative decisionmaking processes. Using US mortgage lending as an example (...) use case, we discuss the ethical foundations of each definition of fairness and demonstrate that our proposed methodology more closely captures the ethical trade-offs of the decision-maker, as well as forcing a more explicit representation of which values and objectives are prioritised. (shrink)

The Glass Bees by Ernst Jünger was first published in Germany in 1957. It is a speculative fictional work that foretells much of what today is the reality of life in a technological society. Of particular import is his portrayal of the ambiguity of human character and moral guideposts that leave only power to mediate human relationships. These psychological and cultural symptoms can be traced to a society under the unremitting spell of the extension of technique. Headlines drawn from today (...) demonstrate that the portrayal was not overstated. (shrink)

A talk on the morality of money lending, which looks at three different approaches to the problem of usury: political regulation, religious prohibition and economic toleration.

Many philosophers take the point of Plato's Euthyphro to be an indictment of attempts to ground morality in religion, specifically in the attitudes of a deity or deities. It has been argued cogently in recent essays that Plato's case is far from conclusive. This essay suggests instead that the Euthyphro can be read more narrowly as raising critical questions about a specific religious virtue, Piety. Then it presents the ingredients of a reply to those questions. The reply proceeds by suggesting (...) that one need not accept the standards of definition used by Plato, and that one can provide an explanation of what Piety is by embedding Piety in a more comprehensive picture of the human, the divine, and the relations between the two. The picture makes use of a doctrine of divine sovereignty and a doctrine concerning love between God and humans. (shrink)

The precise manner in which language serves its communicative function suggests that natural selection, rather than exaptation or reappropriation, played the major role in its evolution. Natural selection is more readily invoked, I suggest, if it is assumed that language originated as a system of manual gestures, and later switched to an oral mode.

The evidence on gender discrimination in lending remains controversial. To capture gender biases in banks’ loan allocations, we observe the impact on the applicants of a microfinance institution and exploit the natural experiment of a regulatory change imposing a strict EUR 10,000 loan ceiling on microcredit. Descriptive statistics indicate that the presence of the ceiling is associated both with bank-MFI co-financing and with harsher treatment of female borrowers. To investigate causal links, we develop an econometric approach that addresses the (...) concerns of selection biases, multicollinearity, and endogeneity. Our empirical findings suggest that the change in the MFI’s gender-related attitude was triggered by banks through co-financing. Hence, we speculate that co-financing pushes ceiling-constrained MFIs to import whatever biases in loan granting that the banks are prone to. Overall, this paper stresses that apparently benign regulations such as loan ceilings can significantly harm the women’s empowerment efforts made by MFIs. (shrink)

This article deals with the ethical issues faced by commercial banks, governments and international financial institutions in their international lending activities. Such issues include not only to whom and for what purpose such lending takes place but also the more delicate questions of the relations between sovereign lending and economic management, as well of lending to sovereign countries embroiled in situations of conflict. It leads to the ethical issues raised by the present international debt crisis: co-responsibility, (...) burden-sharing, role of the international organisations. Finally, capital flight out of developing countries is studied as a special case. (shrink)

Micro Credit (MC) programs lend money to poor borrowers using innovative mechanisms such as group lending under joint liability while successfully accounting for the presence of asymmetric information in underdeveloped financial markets. MC programs have achieved what the conventional financial institutions and the government have not been able to: lend to the poor, impressive loan recuperation, and a positive impact in poverty reduction. This article analyzes the performance of ALSOL, an MC program in Chiapas, México, for 2151 participants in (...) urban and rural areas for the time period between July 2000 and July 2001. While loan recuperation is high (95%), administrative costs also remain high. Socially responsible lenders and donors play a key role in providing continuous funding to MC programs and assisting in reducing the level of poverty. (shrink)

This paper examines the impact of three culturally endorsed leadership prototypes on bank lending corruption. We bring together studies that approach the corruption of bank lending officers from the perspective of a principal-agent problem and studies from the leadership literature, suggesting leadership as an alternative to contractual solutions to agency problems. We hypothesize, based on these views, that culturally endorsed leadership styles that improve (worsen) the leader-subordinate relationships have a negative (positive) effect on bank lending corruption. Using (...) a sample of around 3,500 firms from 36 countries, we find that the prosocial leadership prototype and the nonautonomous leadership prototype do not matter, whereas the self-serving leadership prototype has a positive and statistically significant effect on bank lending corruption. These findings are robust to the inclusion of various control variables in the regressions, and alternative estimation approaches, including ones that account for endogeneity concerns. Furthermore, we find that the power of bank regulators and the age of the credit information sharing mechanism play a moderating role in the relationship between the self-serving leadership prototype and bank lending corruption. (shrink)